How Splunk’s Could Benefit from Its Acquisition of Phantom


May. 25 2018, Updated 9:02 a.m. ET

Importance of the Phantom acquisition

Splunk (SPLK) has completed its $350 million acquisition of Phantom Cyber, a pioneer in SOAR (security orchestration, automation, and response). The acquisition could boost Splunk’s SOC (security operations center) by automating workloads, organizing tasks, enhancing collaboration, and speeding up incident response.

According to Splunk president and CEO Doug Merritt, “The combination of Splunk’s machine data platform with Phantom’s SOAR technology will accelerate a new age of analytics-driven security and expand Splunk’s vision as the security nerve center for SOCs around the world.

In October 2017, Splunk bought SignalSense, a privately held technology company delivering cloud-based advanced data collection and breach detection solutions that can drive machine learning. The financial terms of the deal were not disclosed.

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Importance of acquisitions

These acquisitions not only allow the company to enhance its product lines but also gain market traction through inorganic growth. They also help the company downplay competition with other data analytics companies such as Teradata (TDC) and Tableau Software (DATA).

The graph above shows Splunk’s acquisition trends over the last five years. It has spent ~$234.3 million at an average of $46.9 million every year on acquisitions.

The company’s strong free cash flow has maintained its acquisition goals. Splunk completed fiscal 2018 with $242 million in free cash flow, against $156 million in fiscal 2017. It has generated an average free cash flow of $131 million in the last five years, and this healthy free cash flow may encourage more acquisitions.


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